EURJPY is flirting with its 15-year high of 157.94 again that it registered in July, thanks to strong buying interest over the past three days.
The pair bounced up with strong momentum following the nosedive to a six-week low of 151.39 last Friday, forming a bullish channel in the medium-term picture. More fuel is needed to continue the rally above 158.00, but the negative trend in the RSI and MACD cast doubt on a major change happening soon. Note that the stochastic oscillator is nearing its 80 overbought level too.
If the uptrend resumes above 158.00, the price could mark a new higher high somewhere between 160.00 and 161.35, where the two resistance lines from January could cap the price. Another successful battle there could lift the price towards the 163.00 barrier last seen in August 2008, while a faster increase could target the limits around 165.00.
Looking for support levels, the 20-day simple moving average (SMA) has been limiting both upside and downside movements occasionally in the past and could immediately come into consideration at 155.85 if sellers take control. The space between the 50-day SMA and the 153.00 round level might delay a test near the channel’s lower boundary seen at 152.00. Even lower, the pair might seek shelter within the 150.00-149.80 constraining zone.
In brief, despite the quick recovery from last week’s plunge, EURJPY has not eliminated downside risks yet. An obvious extension above 158.00 is essential for a continuation towards 160.00.
